In a significant move, the Indian government today named Chetan Ghate, Pami Dua and Ravindra H Dholakia as members on interest-rate setting Monetary Policy Committee (MPC).
The committee, which will take over the job of setting interest rate, will have six members, with the government and the Reserve Bank of India appointing three persons each. The Appointments Committee of the Cabinet cleared the three experts as members on the MPC for a period of four years. RBI nominees will include, governor, a deputy governor and one more person from the central bank.
Chetan Ghate is a professor at Indian Statistical Institute and Pami Dua is a director at Delhi School of Economics, while Ravindra Dholakia is a professor at Indian Institute of Management, Ahmedabad.
The move comes after the government amending the RBI Act for setting up the MPC. The committee, which will be headed by the RBI Governor, will fix benchmark interest rates an inflation targets.
In August 2016, the then RBI governor Dr Raghuram Rajan had left the benchmark interest rate unchanged, citing “upside” risks to its target of 5% inflation by March 2017. The RBI kept the repo rate at 6.5%. Retail inflation in June was 5.77%, well above the 5% target set by the central bank. The central bank reiterated that it still maintains an “accommodative” stance.
The MPC is expected to sit for its first monetary policy review on 4 October. The RBI governor will not enjoy a veto power to overrule the other panel members, but will have a casting vote in case of a tie.